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The Strategic and Legal Risks of Work-Integrated Learning: an Enterprise Risk Management Perspective

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The Strategic and Legal Risks of Work-Integrated Learning: an Enterprise Risk Management Perspective The strategic and legal risks of work-integrated learning: An enterprise risk management perspective CRAIG CAMERON1 Griffith University, Gold Coast, Australia Work-integrated learning (WIL) is a risky business for universities. WIL is a strategic risk worthy of pursuing by universities in the prevailing higher education environment, which is characterized by competition, changes in funding arrangements and stakeholder demand for WIL. Nevertheless the strategic opportunities that WIL presents cannot be achieved without the university taking on unavoidable and distinct legal risks that may have serious financial and reputational consequences for the university. This article examines WIL through a lens of enterprise risk management. The author describes how WIL is a strategic risk for universities, and identifies the possible legal risks of WIL through a review of empirical studies and case law in Australia. It is argued that risk management involves a balance between the university goals of maximizing the strategic value and minimizing the legal risks in relation to WIL. (Asia-Pacific Journal of Cooperative Education, 2017, 18(3), 243-256) Keywords: Work-integrated learning, legal risk, strategic risk, risk management, enterprise risk management This article examines work-integrated learning (WIL) through a lens of enterprise risk management (ERM), a comprehensive process of managing risks across the university that may affect the achievement of university objectives related to its core activities in learning and teaching, research, and service (Abraham, Baird, & Neugebauer, 2013; Ackley et al., 2007; Association of Governing Boards of Universities and Colleges & United Educators, 2014; Kaplin & Lee, 2013; Mattie, 2007). ERM evolved from the private sector, a consequence of lessons learned from the high risk financing strategies responsible for several business failures during the Wall Street crash of the late 1980’s (Clyde-Smith, 2014). Empirical studies demonstrate that a number of universities in the USA are implementing ERM because of its perceived benefits, compared to the traditional “silo” approach to risk management in which university elements act in isolation from one another, detached from the goals of the university (Ackley et al., 2007; AGB & UE, 2014). There is also evidence that ERM is being adopted by Australian universities (Clyde-Smith, 2014) and it is suggested that the risk-based approach to higher education regulation in Australia represents a model of ERM (Padro, 2014). There are five features which distinguish ERM, as it applies to universities, from the traditional perspectives of risk and risk management: 1. Dual perspective on risk: Risks are conceptualized as opportunities (positive) as well as hazards or threats (negative) to the university (Abraham et al., 2013; Cassidy, Goldstein, Johnson, Mattie, & Morley, 2001; Clyde-Smith, 2014). ERM involves universities managing the opportunities and minimizing the hazards (Mattie, 2007); 2. Holistic perspective on risk: Risks represent issues across the university that can affect the university’s ability to meet its objectives (Blustain et al., 2016; Mattie, 2007; Tufano, 2011); 3. Strategic focus of risk management: Risk management is “mission centered” (Tufano, 2011), linked to institutional governance and aligned with the goals and objectives of the university (Mattie, 2007); 1 Corresponding author: Craig Cameron, [email protected] CAMERON: Risk management perspective of the strategic and legal risks of WIL 4. Shared responsibility for risk management: All parts of the university are involved with and share responsibility for risk management (Ackley et al., 2007; Blustain et al., 2016); and 5. Integration with traditional risk management: The distinguishing features of ERM are integrated with traditional risk management (Ackley et al., 2007). From an ERM perspective, risk is any issue that influences, positively or negatively, the university’s ability to meet its objectives (Mattie, 2007). This broad definition of risk encompasses a range of operational, reputational, strategic, financial and legal issues (or risks) that may impact on the university’s ability to meet its objectives. Strategic risk is an issue that affects the university’s ability to achieve the goals specified in university strategy, whereas operational risk is an issue that affects those day-to-day operations of the university that are necessary to achieve the goals (Ackley et al., 2007; Cassidy et al., 2001). Financial risk is about the potential loss of assets and reputational risk is associated with the university’s prestige, standing, or brand (Blustain et al., 2016). Legal risk is defined in this article as an event or circumstance that exposes the university to the possibility of liability or non- compliance with external or internal rules and regulations. The categories of risk may also be interrelated, in that the same event or circumstance may generate legal, operational, strategic, financial and reputational risk. This article focuses on the strategic risks and legal risks associated with placement WIL, being student placements in real, as opposed to simulated, practice settings. The unique legal risk profile of placement WIL is demonstrated in this article by the review of empirical studies and reported cases in Australia, which all involved placement WIL. It is argued that WIL is an appropriate activity for viewing through an ERM lens. WIL is conceptualized in this article as a strategic risk. WIL programs are delivered by academic disciplines across the university to meet university goals with respect to learning and teaching (holistic perspective on risk), and they offer strategic opportunities as well as legal hazards (dual perspective on risk). Various university elements are involved with managing the risks associated with WIL (shared responsibility for risk management), and their risk management activities are aligned to the goals of the university (strategic focus of risk management). The goals of the university are to maximize the strategic value of WIL but to minimize the legal hazards that WIL entails. ERM is a model for articulating the balancing act between the strategic risks and legal risks to achieve the goals in relation to WIL. The article firstly discusses how WIL is a strategic risk for universities. This is followed by a review of empirical studies and case law in Australia to identify the possible legal risks of WIL. The next section applies the ERM model to the strategic and legal risks of WIL, and illustrates the distinguishing features of ERM using a WIL “see-saw”. The article concludes by considering the applications and implications of this research for an intended audience of staff involved with the delivery of WIL programs (WIL staff), university management and university elements such as the legal office, insurance-risk and student equity and disability services that are responsible for supporting risk management in WIL programs. WORK-INTEGRATED LEARNING AS A STRATEGIC RISK WIL involves a strategic risk taken by higher education to support the goals of a university. Competition on a national and global scale, and a shift in funding arrangements, has necessitated a more “business-orientated” approach to higher education by Australian Asia-Pacific Journal of Cooperative Education, 2017, 18(3), 243-256 244 CAMERON: Risk management perspective of the strategic and legal risks of WIL universities (Freudenberg & Samarkovski, 2014; Smith & Worsfold, 2015). WIL has strategic value because it satisfies the demands of two key stakeholders – students and employers. Delivering WIL programs can enhance a university’s reputation, which can be critical in attracting future students, and can positively influence student satisfaction with their degree (Blackwell, Bowes, Harvey, Hesketh, & Knight, 2001; Cameron, Freudenberg, & Brimble, 2013; Patrick et al., 2008). If the consumer (student) is satisfied with the delivery of their educational product, this can have a positive impact on student enrolment and retention, thus providing a continuing income stream for the university through to graduation, and potentially after graduation if the student pursues further studies (Zegwaard & McCurdy, 2014). Employer satisfaction with WIL programs can strengthen university–employer relationships and employment outcomes for students. This enhanced relationship may lead to research partnerships, consultancy work and other shared initiatives (Cooper, Orrell, & Bowden, 2010; Patrick et al., 2008). Many universities have formally recognized WIL as a strategic risk by incorporating WIL as part of their objectives (Cooper et al., 2010; McLennan & Keating, 2008). For example, a goal in the Griffith University Strategic Plan 2013–2017 is to “prepare work-ready graduates with the capacity to play an influential role in the world” (Griffith University, 2013, p. 5). The target to achieve that goal is “to ensure that all students experience at least one of the following by 2017: work-integrated learning; service learning; a research project/practicum; an international study experience” (Griffith University, 2013, p. 5). As a consequence, WIL programs are becoming more accessible for students in non-traditional WIL disciplines such as business and the arts. An example of this is WIL being embedded within the business curriculum at Griffith University, as part of its strategy to improve the educational experience of students, to attract and retain students and to facilitate
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